Implement Self-Assessment Tax for Advance Payments

In some countries, taxes must be self-assessed when there is advance payment (prepayment) for supply of goods/services.

Under this self-assessment tax mechanism, the receiver of the goods/services is required self-assess the applicable taxes on advance paid for supplies.

There may be different rules, based on which taxes must be self-assessed on payment of advances. For example,

• Case 1: Taxes must be self-assessed on payment of advances for supply of goods/services from non-registered suppliers.
• Case 2: Taxes must be self-assessed on payment of advances for supply of specified goods/services.

You can use the Self-Assessed Tax feature to manage the self-assessment of taxes on advance payments for the supply of goods/services.

Follow these steps:

1. Enable Tax Calculation on Prepayments in the Configuration Owner Tax Options task for applicable Business Unit or Legal Entity.
2. Define tax registration rules for computation of taxes as self-assessed.
3. Enable the Self-Assessed Tax feature at the Legal Reporting Unit of Receiver organization.
4. Define the tax registration status of suppliers at Third-Party Tax Profile/Third-Party Site Tax Profile.
5. Define Product-Fiscal classification rules for Inventory Linked items (goods) and Product category rules for Non-inventory Linked items (services) for the computation of taxes as self-assessed for specified goods/services.